RBC`s Gero: Comex Gold Gets Short-Covering Bounce
Mining News Pro - George Gero, managing director with RBC Wealth Management, is describing the bounce in gold prices so far Tuesday as short covering. This is when traders with short, or bearish, positions buy to offset them. The covering came about after the short side of the market became “crowded” during a recent price pullback, Gero says. “All this means too many bears in the woods, and [a] dollar pullback quickly brings some short covering,” he adds. As of 9:18 a.m. EDT, Comex December gold was $3.10 higher to $1,220.70 an ounce, while the September dollar index was down 0.307 point to 94.88. Gero cautions, however, that short-covering rallies tend to not last long, as is the case with event-driven rallies and sell-offs. “Steady up moves with open interest up is a better signal for traders,” he adds.
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Commerzbank: Gold To Test $1,200; ETF Outflows Continue 

Gold likely will test the $1,200-an-ounce level, and outflows continue from global exchange-traded funds, says Commerzbank. Spot metal has bounced so far Tuesday, trading up $6.50 to $1,213.70 an ounce around 7:40 a.m. EDT. “A somewhat weaker U.S. dollar this morning is preventing gold from shedding more of the gains it achieved late last week and from nearing the $1,200-per-troy-ounce mark again,” Commerzbank says. “It is not far off this threshold, however. We still think it is likely that this psychologically important mark will be tested. After all, the headwind faced by the gold price is not really abating as yet.” Analysts cite Bloomberg data showing that gold ETFs posted an outflow of more than seven tones Monday. “Holdings have thus already been reduced by almost 16 tonnes since the beginning of the month,” Commerzbank adds. 

FXTM: ‘Medium- To Longer-Term Outlook For Gold Remains Bearish’

The outlook for gold remains bearish, says Lukman Otunuga, research analyst at FXTM. The metal has drawn support early Tuesday as the U.S. dollar eases. “While the precious metal could struggle higher in the near term if the dollar continues to weaken, the medium- to longer-term outlook for gold remains bearish,” Otunuga says. “It is becoming quite clear that the dollar is starting to outshine gold as a safe-haven asset while expectations of higher U.S interest rates have translated to further pain for the zero-yielding metal.” The analyst also says gold looks bearish on the technical charts, with consistently lower lows and highs. “Sustained weakness below $1,213 could invite a decline towards $1,200,” Otunuga says. “Alternatively, a solid breakout and daily close above $1,213 may trigger a rebound towards the $1,224 lower high.” Spot gold was $6.50 higher to $1,213.70 an ounce around 7:40 a.m. EDT. 


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